Prescription-drug prices are bound to soar even higher under trade pacts like the one being negotiated this week at the Summit of the Americas in Quebec City, health-care experts say.
From heart drugs to chemotherapy, essential medications represent the fastest-growing expense in health care today. In the past 15 years, Canada's prescription-drug bill jumped 344 per cent, according to a study last month by the Canadian Institute for Health Information.
There are many reasons for the increase: New drugs have been approved to treat everything from arthritis to Alzheimer's disease, adding to total drug bills. An aging population is demanding more essential medications.
It's no coincidence that escalating drug costs have occurred during this period of excessive patent protection.
Trade Policy Analyst
And international trade deals - like the bureaucratically titled Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) - have strengthened the patent monopolies enjoyed by big brand-name pharmaceutical companies.
The TRIPS deal has allowed these companies to keep their prices high for the 20-year life span of drug patents.
Drug patents have helped pharmaceutical companies net highly profitable returns on billions of dollars in research into new medicines. But without the profits derived from those patents, industry officials argue, innovative medicine would languish.
Local observers also point out that long-term drug patents have proved to be a boon to the Montreal-area economy. Companies like Merck Frosst have established large research centres in the city, creating thousands of jobs and billions of dollars in revenue.
That doesn't silence the critics.
"It's no coincidence that escalating drug costs have occurred during this period of excessive patent protection," said Scott Sinclair, a trade-policy analyst who has advised provincial and territorial governments.
"Twenty years is a very long time, particularly when we're talking about access to essential medications."
Critics also point to the astronomical cost of AIDS drugs in the Third World as evidence of a patent policy gone awry. For years, pharmaceutical firms have refused to lower the prices of AIDS drug cocktails in impoverished African nations where more than 25 million people are infected with the human immunodeficiency virus.
International pressure has recently shamed these firms into slashing the prices of their AIDS medications in some parts of the developing world. But a coalition of 39 pharmaceutical companies is still suing the South African government for passing a law that permits the import of affordable AIDS medication and the manufacture of much cheaper generic drugs.
The drug companies intend to argue before the Supreme Court of South Africa that the government is flouting the TRIPS agreement.
Still, one need not look to the Third World for evidence of drug companies seeking to maintain their monopolies in the name of free trade.
In June 1999, the United States sued Canada before the World Trade Organization for violating drug patents. The United States pressed its case before a WTO tribunal even though Canada had passed legislation in 1993 reinforcing drug patents.
Last September, the WTO tribunal sided with the U.S. - a ruling that is expected to cost Canadian taxpayers tens of millions of dollars in higher drug costs over the next few years. The U.S. successfully argued that Canada had reneged on an agreement to provide the 20-year patent protection required under the TRIPS deal.
Although Canada adopted 20-year drug-patent legislation in 1987, it applied only to patents filed after October 1989. Previous patents lasted 17 years.
The result of the WTO ruling, therefore, has been to give an extra three years' patent protection to makers of many commonly used drugs.
And that can only mean higher prices for consumers, says Dr. Joel Lexchin, a Toronto emergency physician and expert on the pharmaceutical issue.
"If drug patents are lengthened and generic drugs are delayed coming on to the market, then that means that drug care becomes much more costly," Lexchin said.
Reluctantly, Canada has tabled legislation to conform to the WTO ruling. One amendment will effectively delay competition from cheaper generic drugs even further - by stripping those generic drug-makers of the right to manufacture and stockpile medicines six months before a patent expires.
Sinclair, now a senior researcher with the Canadian Centre for Policy Alternatives, says the WTO ruling has undermined the authority of Parliament to use patent legislation as an integral part of Canadian health-care policy.
"What we're talking about here is certainly not a traditional trade-policy issue," he remarked. "The question of what term of patent protection is necessary to encourage innovation should be a democratic policy choice."
Analysts fear such drug-patent protection will be extended in a Free Trade Area of the Americas (FTAA) pact to be discussed in Quebec City this weekend. Details of the deal's patent-protection provisions are not known because negotiators only plan to make the agreement's text public after the summit.
But Jim Keon, president of the Canadian Drug Manufacturers' Association, notes that the U.S. has been pushing for 25-year patents.
"We are quite concerned about the FTAA," Keon said. "I think the strategy of the international drug companies - and abetted by the U.S. government - is to negotiate these (patent) agreements and put them into as many different treaties as possible, so that you're bound in many different ways to respect them."
Generic prescription-drug sales accounted for $1.3 billion in Canada last year. That's 14 per cent of the total market of more than $11 billion. Despite their relatively small market share, generics made up 40 per cent of all prescriptions filled - a clear sign of their popularity, and low cost.
The price disparity between brand names and generics is dramatic. For example, Terazosin, a drug used in the treatment of high blood pressure, sells for 95 cents a pill under the brand name Hytrin. The generic version sells for 60 cents.
Martin Zelder, a health-policy analyst for the Fraser Institute, defends the higher price of patent drugs as an acceptable cost for new life-saving medicines.
"I think the generic drug-makers' view is short-sighted in that they're only looking at one side of the issue," Zelder said. "They're not looking at the important social benefits arising from stronger patent rights like more research and development."
For Sinclair, though, it's clear that lengthy drug patents are eroding our public health-care system.
"Canadians should see the writing on the wall," he said of the FTAA. "Rising drug costs are a burden for consumers, as many Canadians have to pay out of their own pocket, and they're a burden on the taxpayer, because provincial plans cover drugs administered in hospitals."
© 2001 CanWest Interactive and The Montreal Gazette Group Inc